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March 25, 2014

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The State of the Industry January 2012: 15 Industry Experts On 2011's Most Important Trends and Their Forecast for the Year Ahead

Page 3 - Global Views & New Perspectives

By Ron Jackson 

Gregg McNair, Chairman, PPX International 

PPX International Chairman Gregg McNair, who was profiled in our October 2009 Cover Story, heads another domain industry conglomerate that has become a leader in domain sales, consulting and monetization. The inexhaustible Aussie is almost always on the road, tending to PPX's far flung enterprises, meeting clients and spreading the domain gospel. Here is Gregg's view of key events in 2011 and what may be coming in 2012. 

Gregg McNair: From the standpoint of a diverse group of industry business units PPX International has experienced another year of significant growth. The stand out performer was DomainAdvisors which exceeded all projections and has rapidly become a major player among professional broking houses. It just goes to reprove that a service business is all about having the right people. Congratulations to Tessa Holcomb, Jeff Gabriel and the ever growing DA team! 

On other fronts challenges included policy changes from Google in an an ever moving landscape requiring adaptation and innovation. Over the past year the general global economic uncertainties contributed to tentative investment decisions and prudent retention of funds for future provision by most businesses. This has brought pressures upon all facets of domain monetization and in particular has resulted in many traffic owners looking at alternatives.

Rotating platforms such as our DMPro along with Rook Media and Internet Traffic as new Google PPC players, have benefited from this shake up. Overall Google gained strength as the Yahoo influence in domain traffic was minimalized further.

Gregg McNair
Chairman, PPX International

In many respects 2012 has begun with the same specter of economic uncertainty as 2011. This is likely to heighten the intensity of traffic owners to optimize returns and diversify the base and source of their earnings wherever possible.

In some instances we are seeing some significant industry players scaling back involvement and I expect those forces to intensify over the next year. Fortunately there are new and growing
publishers to take up the slack which should ensure that overall the domain space will grow and morph as it begins to embrace the reality of new GTLDs.

Portfolio and premium generic domain prices are likely to remain under pressure until we see some genuine economic light at the end of the tunnel. However good end user sales are expected to
continue as our industry continues on the road to maturity.The new year will doubtless bring challenges but we are excited at the emerging opportunities that result from continual growth and change.

Jan Barta, Elephant Orchestra 

For a European view we turned to the Czech Republic's wildly successful domain investor Jan Barta of Elephant Orchestra, who was the subject of our May 2011 Cover Story. In recent years Barta has expanded his interests far beyond the world of domains, diversifying into other businesses including feature film production, auto insurance, mobile marketing and many more that are giving him an ever growing financial footprint in Eastern Europe and beyond. Jan and the three experts that follow him on this page are all contributing to our annual State of the Industry report for the first time. Barta began his comments with a focus on the field that has provided so much fuel for his overall business success.  

Jan Barta
Elephant Orchestra

Jan Barta: Since my category is monetization (being a large owner of domains with type-in traffic and also partner in Elephant Traffic, our monetization solution) I'll touch mostly this area. I see 2011 as a year when domain monetization finally stabilized or in some cases even increased after the free fall that started after 2008, when the monetization market peaked. I see three main reasons for this: 1. The domain channel has been finally cleaned up (read: bad traffic has largely been removed), 2. Google syndicating its feed to multiple new partners in 2011. This has increased competition between parking companies, hence domainer payouts have increased, 3. The rise of alternative monetization such as zero click (direct to advertiser) or affiliate marketing, which have now completely taken over certain verticals from parking.

As for the industry as a whole, there  was definitely strength in the aftermarket in low to mid-priced domains. I see the main catalyst for this being integration with the registrar channel and the move to buy it now pricing. Also the primary market - the registrar side of the business - had a pretty good year and I believe that should continue into the future.

As for the new year, to start off - from a macro perspective - if 2011 was the year of stabilization, 2012 should be the year of returning to growth, not explosive growth, but at least some kind of growth.

In monetization, I believe domain earnings should be stable to growing for domainers due to the three factors I mentioned above. A big trend I think we will see in 2012 is the commoditization of the PPC parking business, which will mean much smaller margins and hence profitability for parking companies - I think this will cause more trouble to the incumbents such as Sedo, DomainSponsor and Oversee. On the flipside - I think parking companies will finally be forced to innovate and undergo a transformation from mere feed syndicators to full blown monetization platforms, reaching out directly to advertisers, introducing new products etc, all to the benefit of the ultimate traffic owner - the domainer.

In the industry as a whole, a lot of the growth will come from the new GTLD craze with the application window now open. I believe there will certainly be a few success stories going forward, but my expectation - to contrary belief - is that most new GTLD strings will end up as failures, a huge amount of money (tens to hundreds of millions) being burnt in the process. As for the aftermarket in 2012, I do see growth in the the low to medium priced market but softness in the million dollar+ segment. The primary - registrar - market should continue growing fairly well. Overall, 2012 should be a decent year for the domaining industry as a whole.

Bill Sweetman, Tucows Domain Portfolio

Bill Sweetman was just promoted to Vice President of the Tucows Domain Portfolio this month, a position earned through his successful stewardship of the Portfolio's consumer-facing brand, YummyNames, which Bill continues to run. Based in Canada and doing business all over the world, Sweetman believes relatively untapped foreign markets will generate a lot of growth in 2012. But first thngs first - Bill starts out with some comments on the past year. 

Bill Sweetman: When I look back at 2011, the most significant event for me was the launch of Frank Schilling's InternetTraffic.com parking platform. This was a classic Frank move: it was smart, it was bold, and it was efficient, but most of all it changed the dynamics of the industry (at least the parking business) almost overnight. We migrated a large chunk of our portfolio over to his platform and for the first time in years I saw a significant increase in our parking revenue. Sadly, I had gotten used to years of declining parking revenue, so imagine my surprise when I started to see the numbers climb.  

Another significant event this year was the aggressive growth and expansion of the two major 'real-time' domain sales networks, AfternicDLS and Sedo MLS. NameMedia and Sedo both really stepped up their game in terms of signing on registrar partners and portfolio holders, and I believe these types of sales distribution networks are critical to the future success of the domain name aftermarket. Getting fixed price inventory in front of end users at the precise moment they are doing an initial domain query is critically important if you want to move inventory, and this is also a huge 

Bill Sweetman
VP, Tucows Domain Portfolio

convenience for the end user who has never heard of WHOIS and doesn't want to haggle over price. We rang up a lot of sales this way in 2011, and we know we will do even more in 2012 as networks like these evolve.  

Finally, the recent $1 million sale of dudu.com (brokered by Sedo in Q4 2011 but announced at the start of 2012) really stunned me and gave me pause for thought. Obviously this was a freaky, miracle exception of a sale. That being said, this sale really demonstrated the magic that can happen when a very motivated buyer meets a very skilled seller (or in this case, an exceptional broker). I think there's a lesson or two in here that we can all benefit from: remember the dudu!

The biggest challenge I face in 2012 is one that I think all of us in the domain aftermarket have faced for many years: Joe Public still doesn't realize that the domain name he wants but is already registered could still be available for purchase. This is the biggest and most frustrating disconnect in our industry, followed only by Joe Public not recognizing the value of a premium domain name. Sure, we have all made and seen progress in this regards over the last decade, but we still have a very long way to go. This is why some of the smartest minds in the industry holding the most fantastic domain portfolios struggle to sell even 2-3% of their inventory every year.

Image: Master isolated images


More marketing, increased distribution, and tons more education still need to happen before the aftermarket is even remotely efficient at turning over inventory. Put another way, I believe our best years are still to come.  

One of the opportunities I see in 2012 is selling to buyers outside of North America, especially in Asia. Easier said than done, of course. I have noticed quite an up tick in domain sales to deep-pocketed buyers in Hong Kong, China, as well as India and the UAE. As more and more people and businesses in these countries get online, and as the middle and upper class grow, I think we're going to see a lot more sales - English-language .com sales - emanating from these parts of the world.

This can only be a good thing for portfolio holders, marketplaces, and distributors, but also poses some unique challenges in terms of where and how to handle the actual sale. Perhaps this is the year I learn Mandarin!

Jodi Chamberlain, Adviser for TeamLauncher.com and Producer of DomainingEurope.com

Jodi Chamberlain has an extensive background in both domain development and running major industry events. She produced  T.R.A.F.F.I.C. conferences in the U.S., Canada and Europe and is producing the Domaining Europe conference coming up April 26-28, 2012 in Valenica, Spain. Last year she headed off shoring specialist TeamLauncher.com and built the firm up to 60 employees and she continues to advise that company. Jodi began with some comments on a topic of key interest to domain investors - domain development. 

Jodi Chamberlain: Ever since domainers have been searching for an alternative solution to parking, development has been an option on their radar. In 2011 many domainers dove into development hoping to get more from their investments.

Domainers are stepping into development deals. Frank Schilling openly admits part of his .XXX portfolio has been leased out to the adult industry, giving business owners in this niche the chance to make the most from the generic name. Rick Schwartz selling Property.com is another prime example that a developed name can not only get you top dollar on your investment but can also provide a recurring revenue stream.

Today there’s a variety of ways to develop and just about anyone can afford to do it. If your budget is less than $500, visiting market places such as Elance or Odesk can get you started. Or you can use services such as TeamLauncher.com and hire full time offshore developers and still spend less. Whether its part time or full time, in today’s digital world it makes sense to have a developer on your team or at  least at your finger tips! Websites need frequent attention and one can’t afford to waste time evaluating new talent or getting the new guy up to speed.

Jodi Chamberlain
Producer, Domaining Europe 2012

Not only is the online world under development, people are beginning to understand the fundamentals of it. Wordpress has made it ever so easy to put sites up and even has helped many lose the “I don’t know how to change this” phobia. Google is getting ready to educate the mass on how to use their services which means more and more will want to start an online business. Which at some point requires development. More tools will come onto the scene in the years to come that will help the common man develop at ease.

In 2011 the event scene was quieter than most years. Economy? Maybe. I believe there’s more to it. With the ROI’s being visible in the ad space many decision makers are looking at events and asking, where is my return? Why should I spend $1500 on a ticket (per person) or $10,000 on a sponsorship when I have no idea where my returns are going to be. They basically opt to snooze and lose!

Every success story comes from networking. I remember back in 2008 sitting at a restaurant in NYC with Monte Cahn and Rick Latona. Monte was telling Rick he brought the Moniker team to as many events as he could. This is how Moniker become a success. It was that simple.

There’s no denying domainers love to network. And sometimes their nights seem longer than the day. Everyone leaves an event a healthier person, well, a few with luminous. But for the most part the time spent an event is an enlightenment. Moving into 2012 events will be used not just for advertising products or brands, they'll be more of a meeting location for decision makers. They will arrange meetings months before the event starts and utilize the time within that space to nail out details or shake hands on the deals made.

Paul Goldstone, DomainIt.com and iGoldRush.com

Paul Goldstone, CEO
DomainIt.com & iGoldRush.coim

When it comes to the rapidly-changing Internet, a company that has been around for five years might be considered an "old" company. One that has been in business for ten years is almost "ancient" and one that has survived for 15 years is practically unheard of. Yet, Paul Goldstone, a native of England who is now based Stateside in Cincinnati, just celebrated the 15th anniversary of two different well-regarded online businesses - registrar DomainIt.com and domain news and information resource iGoldRush.com. As one of the industry's true elder statesmen, we thought Paul deserved the honor of having the last words in our 2012 State of the Industry report.

Paul Goldstone: Throughout 2011, the domain industry has received more media coverage than during any other period in time, mostly due to the potential launch of new domain extensions (gTLDs). While it's impossible to fully predict how the new gTLDs will affect the domain industry or the Internet as a whole, one thing for certain is that the topic has brought an increased visibility to domain names while generating new interest and new investors into the industry. However, even with all this talk of domain names, the average user still does not fully understand how domain names can be of 
value outside of them being used as a virtual street address.  iGoldrush seeks to bridge that gap by continuing its core mission since 1996 - to reach out and educate both experts and newcomers as to how they can harness domain names to their advantage.

Another significant trend in 2011 was the continued decline of pay-per-click parked pages as a viable revenue generator for domain owners.  This gradual decline turned into an avalanche when Google announced an algorithm change this past fall that began to remove parked pages from their results.  These changes caused many domainers to drop (not renew) their non-performing domains and refine their portfolios to the domains that make the most sense either from an investment or development standpoint.  It also forced others to shift their focus to a more active approach, by developing at least a few of their domains rather than pointing their entire portfolio to a single parking solution.

With this continued trend towards domain development comes an equal need for development partners and hosting platforms.  We have seen a substantial growth in hosting sales at DomainIt.com.  To help domain holders in the transition of building out their websites and brands we have enhanced and expanded the DomainIt hosting platform and development services to accommodate this current and anticipated growth. We already have a proven track record with several high traffic sites of our own, including two sites that generate an excess of a million page views per month. They say once a businessman has made $1 million you could strip him of his wealth and he'd make it again, and I think the same can be said for successful developers and SEO experts.

Image: suphakit73 / FreeDigitalPhotos.net

I am continuing in 2012 with a plan that I have found very successful through 2011, and that is to align myself with the best. You can't be a jack of all trades but if you partner with the jack of each trade you can do great things. This model proved successful with my most recent partnership with Morgan Linton, arguably the best educator in the industry, to provide informative domain videos on iGoldrush.  I have several other partnerships behind the scenes, and will be forging more relationships throughout the year.

Whatever path you choose for 2012, the most important thing is to do what you love and love what you do. Chances are you'll be successful, but if not, at least you'll enjoy trying!

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